Biofuels encompass any fuel produced from plant- or animal-based feedstock (referred to as “biomass”). The two most common forms of biofuel today are ethanol and biodiesel. Biofuels are used primarily to fuel vehicles, but can also fuel engines or be used in fuel cells to generate electricity.
As countries seek to reduce greenhouse gas emissions from the transportation sector and lessen dependence on petroleum-based fuels, biofuels continue to attract attention as one possible solution. Biofuels offer a way to produce transportation fuels from renewable sources or waste materials and to reduce net carbon dioxide (CO2) emissions because the CO2 emitted during combustion of the fuel is captured during the growth of the feedstock.
Corn ethanol is the most widely used liquid biofuel in the United States. Most of this ethanol is blended into gasoline for use in passenger vehicles. Gasoline with up to 10 percent ethanol (E10) can be used in most vehicles without further modification, while special flexible fuel vehicles can use a gasoline-ethanol blend with up to 85 percent ethanol (E85). According to EPA, most vehicle models manufactured after 2001 can accept 15 percent ethanol (E15) without modifications. Some industry stakeholders have claimed that E15 may invalidate manufacturer warrantees, although vehicle warrantees vary and might not specifically prohibit a particular fuel., EPA intends to reduce the risk of any misfueling through careful fuel labeling. Biodiesel is the other commonly used biofuel in the United States, primarily produced from soybean oil. The most common blend of U. S. biodiesel is 20 percent biodiesel/80 percent petroleum diesel (B20). Biodiesel can be legally blended with petroleum diesel in any fraction, though vehicle system modifications may be required for percentages higher than B20. Figure 1 shows U.S. consumption of these biofuels over time.
Figure 1: United States Annual Biofuel Consumption, 2001 - 2011
Source: Energy Information Agency (2012) http://www.eia.gov/totalenergy/data/annual/index.cfm#renewable 
U.S. non-petroleum liquid fuel production is projected to grow from 1.09 million barrels per day in 2011 to 1.97 million barrels per day in 2040. In 2011, ethanol production was nearly 14 billion gallons (just over 10 percent of total gasoline consumption), in compliance with the Renewable Fuel Standard (RFS) from the Energy Independence and Security Act of 2007. This policy requires that a percentage of fuels come from biogenic sources, directly mandating certain volumes of biofuels. The EPA recently announced that the 2013 mandate for biodiesel will increase to 1.28 gallons from 1 billion gallons in 2012. Mandated advanced biofuel production, meaning fuels with at least a 50 percent emissions reduction from gasoline, will increase from 2 billion gallons to 2.75 billion gallons in 2013 (See Table 1). For more, see C2ES resource Renewable Fuel Standard .
Table 1: RFS Ethanol Equivalent Volume Requirements, 2011 – 2013 (billion gallons unless noted)
Total Renewable fuel (Including Ethanol)
Note: Volumes are ethanol-equivalent, except for biodiesel which is actual volume,
Source: EPA (2013) http://www.epa.gov/otaq/fuels/renewablefuels/regulations.htm 
A wide variety of feedstocks are currently in use or under development to produce biofuels (see Figure 2). These feedstocks differ significantly in the types of lands on which they can be grown, yields per acre, and the fuels into which they are processed.
Figure 2: Current and Emerging Biofuel Pathways
Source: Pena, N., Biofuels for Transportation: A Climate Perspective, 2008. http://www.c2es.org/publications/biofuels-transportation-climate-perspective  .
Today’s commercial processes convert simple sugars, starches, or oils to produce biofuels—the fermentation of cornstarch (from the corn kernel), sugar beets, or sugarcane produces ethanol, and the transesterification of oils (e.g., soybean or palm oil) produces biodiesel. Of the feedstocks in use today, sugar beets, sugarcane, and palm oil yield the highest amount of fuel per acre on a gasoline gallon-equivalent basis.
However, the vast majority of available plant material for biofuels is in the form of cellulose, hemicellulose, and lignin. This biomass is not currently used in most biofuel production processes. Because of the high availability of these materials, processes capable of converting cellulose to biofuels represent one pathway to significantly lowering the resources needed to grow biofuel feedstocks. Furthermore, once the cellulose is extracted from the plant to produce the biofuel, the remaining lignin can be used as a fuel to power the biofuel conversion process. Lignin yields energy when burned and further limits the fossil fuel inputs required to produce the biofuel. Researchers are also looking at different sources for oils that can be converted into biodiesel.
Examples of emerging feedstocks include:
Biochemical Conversion Process
These feedstocks have the ability to reduce greenhouse gas emissions significantly relative to conventional gasoline and diesel fuel. Because they are not food-based and are often processing wastes from other industries, they also have the added benefit of limited competition with agricultural food crops.
When calculating the greenhouse gas emission reductions from biofuel use, it is important to examine the full lifecycle of emissions from the fuel. Potential greenhouse gas emission reductions vary widely, depending on many factors including feedstock selection, fuel production through feedstock conversion, and final fuel use. Fossil fuels are often used in growing and processing feedstocks, which can increase the lifecycle emissions for the biofuel. Changes in land use and land management practices to grow biofuel feedstocks also affect the greenhouse gas profile of a fuel. As biofuel production increases, concerns are growing about the actual greenhouse gas reductions achieved by these fuels as well as competing objectives for water and land resources.
If grown in a sustainable manner, biomass is considered a carbon-neutral energy source – meaning that the greenhouse gas emissions, namely CO2, released from converting biomass to energy are equivalent to the amount of CO2 absorbed by the plants during their growing cycles. Sustainable biomass sources refer to those that limit land use change (LUC), avoid pollution, prioritize waste materials, and regrow quickly. Without actions to ensure sustainability, an increase in dedicated crops could result in undesirable impacts in natural settings, such as LUC and pesticide use. Additionally, fossil fuel use in biomass harvesting, transporting, and processing has an effect on total emissions.
Developing greenhouse gas profiles over the lifecycle of a fuel is not an easy task. It is challenging to design scientifically-based, equitable methodologies for estimating lifecycle greenhouse gas emissions for both petroleum- and bio-based fuels, as well as other potential energy-source options. In practice, not all greenhouse gas emissions can be included in a fuel’s greenhouse gas footprint; choices must be made as to which emissions to include. In the case of biofuels, for example, emissions from the manufacturing and use of fertilizers to produce the feedstock are usually included but emissions from building the fertilizer plant itself are not. Some emissions are measurable, including tailpipe CO2, while others must be estimated, such as indirect land use change occurring because of displaced food crops from increased biomass crops.
Figure 3: Diagram of Lifecycle Emissions Pathway, Corn Ethanol
Source: Delucchi, M. “Appendix X: Pathways Diagrams.” In A Lifecycle Emissions Model (LEM): Lifecycle Emissions from Transportation Fuels, Motor Vehicles, Transportation Modes, Electricity Use, Heating and Cooking Fuels, and Materials, http://www.its.ucdavis.edu/publications/2003/UCD-ITS-RR-03-17X.pdf 
In order to appropriately use these fuels, governments, scientists, environmental groups, and others recognize the need for improved methods to account for greenhouse gas emissions and other environmental impacts caused by using plant material to produce transportation fuels. Importantly, an International Energy Agency lifecycle emissions scenario shows that biofuels could contribute significantly to reducing emissions if increased from today’s 2 percent of total transport energy to 27 percent by 2050.
The right set of public policy tools could spur innovation and promote the use of low-carbon biofuels from renewable sources. These include renewable fuel policies, financial incentives, low carbon fuel standards (LCFS), research and development (R&D), and vehicle fleet programs.
Volumetric mandates based on feedstock can push advanced biofuels (e.g., algae-derived biodiesel) into the market by giving suppliers a more predictable level of sales per year.
A volumetric requirement for biofuels requires that fuel providers sell a certain quantity of the specified fuels over an identified time period. Such mandates have the advantage of offering suppliers a guaranteed market for their products, thus accelerating the penetration of new technologies. Current renewable fuel mandates are based on the feedstock that the fuel is produced from (e.g., corn ethanol). The potential downside to a purely volumetric approach is that producers must sell certain amounts of the fuel, without regard to its lifecycle carbon emissions, so the greenhouse gas mitigation benefit from using these fuels may be uncertain.
The Energy Independence and Security Act of 2007 (EISA 2007) updated the federal Renewable Fuel Standard (RFS), originally enacted under the Energy Policy Act of 2005. EISA 2007 increased the previous volumetric targets for biofuels, mandating that 36 billion gallons of renewable fuel must be used annually by 2022. Of this, a certain percentage of the renewable fuel blended into transportation fuels must be cellulosic biofuel, biomass-based diesel, and advanced biofuel (fuels from bio-sources with lifecycle emissions reductions of at least 50 percent below gasoline). See Table 1 for specific RFS figures.The policy requires that EPA set annual standards based on gasoline and diesel projections from the Energy Information Administration. The EPA conducts an analysis of qualifying fuel sources that be made available and has discretion over volume requirements in order to respond to market conditions.
Several U.S. states have also implemented policies to promote biofuel use (See C2ES Resource Biofuels: Incentives and Mandates Map ). As of July 2012, 42 states provide incentives promoting biofuel production and use. Additionally, ten states have enacted their own renewable fuels standards.
Incentives take the form of tax credits and exemptions, reduced tax rates, and the provision of grants and guaranteed loans. State and local level examples include production grants and incentives, fleet grants for public school systems, ethanol infrastructure grants, alternative fuel tax credits, and registration exemptions. Federal examples include the United States Department of Agriculture (USDA) programs of Advanced Biofuel Production Grants and Loan Guarantees, the Ethanol Infrastructure Grants and Loan Guarantees, and the Enhanced Biofuel Payment Program. Other examples, administered through the Internal Revenue Service, include the recently extended Biodiesel and Renewable Diesel Tax Credit, the Alternative Fuel Infrastructure Tax Credit, and the Credit for Production of Cellulosic Biofuel.
A performance standard (e.g., a low carbon fuel standard, or LCFS) sets targets for reductions in greenhouse gas intensity for the entire transportation fuel pool, not only biofuels. Under an LCFS, a standard would specify the average carbon intensity for transportation fuels, typically for a given year, expressed as a percent reduction from a baseline (e.g., GHG intensity in 2015 must be 5 percent lower than 2005 levels) (see C2ES resource Low Carbon Fuel Standard Map ).
The greenhouse gas intensity for a fuel is calculated on a lifecycle basis, which includes the emissions from production or extraction, processing, and combustion of the fuel. This policy allows manufacturers to produce and retailers to purchase the mix of fuels that most cost-effectively meets the standard. If based on lifecycle emissions accounting, an LCFS is intended to provide a level playing field for all transportation energy sources that may be used in the future, including biofuels, electricity, or hydrogen.
To address some of the concerns with biofuel mandates, California implemented an LCFS through Executive Order S-1-07 (issued on January 18, 2007), which set a goal of reducing the carbon intensity of passenger fuels statewide by a minimum of 10 percent by 2020. In 2012, Oregon began implementing a similar fuel standard by launching Phase I of the Clean Fuels Program, which requires fuel importers and suppliers in the State of Oregon to monitor and report fuel volumes and carbon intensity (the amount of carbon emissions per unit of energy). Upon further approval by the Oregon Environmental Quality Commission, Phase II would require fuel suppliers to gradually lower fuel carbon intensity until it is ten percent below 2010 levels, with achievement anticipated by 2025.
R&D can play an important role in increasing knowledge, proving feasibility, and advancing technology for biofuel production and consumption.  The Environmental Protection Agency Bioenergy Program for Advanced Biofuels Funding, authorized under the 2009 Farm Bill, Section 9005, provides payments to eligible producers that expand production of advanced biofuels from sources other than corn starch. Incentives are intended to diversify the source of biofuel production as well as increase the overall output. Additionally under the Department of Energy and the Department of Agriculture, the Biomass Research and Development Initiative provides grant funds to increase development and demonstration of biofuels. The Department of Transportation also carries out biofuel research in its Bio-based Transportation Research Program in an effort to promote innovation in transportation infrastructure.
Some cities and states require that jurisdictions remove aging fleets and incorporate alternatives fuels. An example is the Texas Clean Fleet Program, which provides incentives for entities that operate large fleets to replace diesel engines with alternative fuel vehicles. At the federal level, the Vehicle Acquisition and Fuel Use Requirements for Federal Fleets, under the Energy Policy Act of 1992, requires 75 percent of light-duty vehicles of certain federal fleets be alternative fuel vehicles (AFVs).
Royal Dutch/Shell 
C2ES Map: State Mandates and Incentives Promoting Biofuels 
Biomass Research and Development Board
International Energy Agency (IEA)
United States Department of Agriculture
National Renewable Energy Laboratory
SCOPE: International Biofuels Project, Biofuels: Environmental Consequences and Interactions with Changing Land Use , (2009)
U.S. Department of Energy (DOE)
 Wald, M, “A New Skirmish in the Ethanol Wars” (2012), http://green.blogs.nytimes.com/2012/05/16/a-new-skirmish-in-the-ethanol-wars .
 EPA, Regulation to Mitigate the Misfueling of Vehicles and Engines with Gasoline Containing Greater Than Ten Volume Percent Ethanol and Modifications to the Reformulated and Conventional Gasoline Programs, (June 2011), http://www.epa.gov/otaq/regs/fuels/additive/e15/420r11006.pdf 
 National Renewable Energy Laboratory, Biodiesel Handling and Use Guide (2009), http://www.nrel.gov/vehiclesandfuels/pdfs/43672.pdf .
 Energy Information Administration (EIA), Liquid Fuels Supply and Disposition, Annual Energy Outlook Early Releaser (2013) http://www.eia.gov/oiaf/aeo/tablebrowser/#release=AEO2013ER&subject=2-AEO2013ER&table=11-AEO2013ER®ion=0-0&cases=early2013-d102312a .
 In 2011, the United States consumed about 134 billion gallons (or 3.19 billion barrels) of gasoline, a daily average of about 367.08 million gallons (8.74 million barrels), EIA, http://www.eia.gov/tools/faqs/faq.cfm?id=23&t=10 .
 EPA, EPA Proposes 2013 Renewable Fuel Standards (2013), http://www.epa.gov/otaq/fuels/renewablefuels/documents/420f13007.pdf .
 EPA, EPA Proposes 2013 Renewable Fuel Standards (2013), http://www.epa.gov/otaq/fuels/renewablefuels/documents/420f13007.pdf .
 Transesterification is a process that modifies the oils in the feedstocks by replacing glycerin in fatty acid chains of vegetable oils with methanol.
 It is necessary convert biofuels to their gasoline-equivalents because the different fuels have different energy content. For example, ethanol contains only 66 percent as much energy per gallon as a gallon of gasoline.
 Cellulose is complex carbohydrate and the main structural component of plants. Hemicellulose is similar to cellulose and found in plant cell walls. Cellulose and hemicelluloses account for 25 to 50 percent of plant material. Lignin is a polymer that provides rigidity to plants cell walls and is second largest component of plant biomass.
 IEA, Technology Roadmap Biofuels for Transport ( 2011), http://www.iea.org/publications/freepublications/publication/biofuels_roadmap.pdf .
 EPA, Renewable Fuels: Regulations and Standards, http://www.epa.gov/otaq/fuels/renewablefuels/regulations.htm .
 C2ES, State Mandates and Incentives Promoting Biofuels, http://www.c2es.org/us-states-regions/policy-maps/biofuels .
 C2ES, Oregon Approves Phase I of Low Carbon Fuel Program (2012), http://www.c2es.org/us-states-regions/news/2009/oregon-governor-signs-legislation-low-carbon-fuel-standard .
 Oregon Department of Environmental Quality, Oregon Clean Fuels Program, http://www.deq.state.or.us/aq/cleanFuel/qa.htm ; Proposed Rulemaking Announcement (2011) http://www.deq.state.or.us/aq/Rulemaking/CleanFuelsNoticeofProposedRulemaking.pdf 
 Biomass Research and Development, http://www.usbiomassboard.gov/related_information/related_information.html  .
 EPA, Program for Advanced Biofuels, http://www.epa.gov/agstar/tools/funding/incentive/USbioenergyprogramforadvancedbiofuels.html .
 Texas Commissions on Environmental Quality, Texas Clean Fleet Program, http://www.tceq.texas.gov/airquality/terp/tcf.html .